The world is moving towards a future driven by digital technology. Commerce has adapted to it by developing digital apps for banking to provide consumers with more convenience. That gave other businesses an idea to take it further, which gave birth to the digital wallet.
A digital wallet is an electronic payment system that allows users to make all kinds of financial transactions. It does so by storing users’ banking or credit card information securely. All you need to do is create an account, and you can access it through a smartphone app and website.
From the concept itself, having a digital wallet does provide convenience. However, just like everything else that exist, it also has its drawbacks. If you don’t have one yet, this blog might help you decide whether to get one as it explains the advantages and disadvantages of having a digital wallet.
The Good of Having A Digital Wallet
Easier money management
Most digital wallet companies market this as one of the biggest values of having a digital wallet, and rightfully so. Going digital does make handling your money more comfortable. The obvious advantage is not having to carry a lot of cash with you when you go out.
Using a digital wallet, you can keep track of your transaction history, remaining balance and pay your bills. You can also avail yourself of a card you can use to withdraw cash from ATMs. Even without that, all you need to have is your smartphone with your digital wallet app and an internet connection, and you can purchase or pay for different kinds of stuff.
Better shopping
Besides the fact that it eliminates counting and carrying a lot of cash, using a digital wallet just makes overall shopping much simpler, both for shoppers and sellers. With a digital wallet app, all it takes are a few taps to finish paying for your purchases. Then, if you run out of funds, you can simply have money transferred to your digital wallet, and you can shop some more.
You can also use gift cards and e-coupons on the digital wallet because it can store them. Digital wallets also allow fast payment by scanning QR codes. Also, you won’t have to remember multiple passwords since you can use your smartphone’s fingerprint lock to secure digital wallet apps.
Enhanced security
Security is always a main concern for anything digital. With digital wallets, companies that develop their apps ensure that every user is protected. Failure to secure and handle customer information properly are typical reasons why a class action lawsuit is filed against any business that collects them to provide service, and digital wallet providers understand consumer rights.
Users’ actual bank account number isn’t transmitted during a transaction using digital wallets. Instead, the wallet generates a token used as an identifier for users to share with merchants. It provides the sensitive data required to complete a transaction, and they also lose value once a transaction is completed.
The Bad of Having A Digital Wallet
It could encourage irresponsible spending
A digital wallet serves as a virtual credit card. Also, both are similar to one another because it enables users to spend money without seeing or touching them. However, as convenient as not carrying a lot of cash can be, it’s not always a good way to spend money you can’t touch or see.
Some people have issues budgeting money they can’t see because it doesn’t feel real. Also, they don’t see the money leave them physically, so they tend to keep spending until they run out of money. If you have this issue, then a digital wallet may not be the best option for you.
Convenience fees
Digital wallets charge extra fees for certain services it provides, such as paying bills and transferring money to and from them. These amounts can also change over time, depending on partner merchants and or government mandates. Although additional charges can be a pain, it’s still a smaller price to pay compared to the ease digital wallets give users.
Limited merchant availability
Not all businesses accept digital payments. You can’t expect small businesses to have QR codes you can scan through the digital wallet app. Also, not all merchants you transact with are on digital wallet apps.
However, with the strong push to digitization, its popularity will eventually catch up to more businesses. As a result, more countries and businesses will accept digital payments as time goes on.
Final word
Digital wallet technology can help more people gain access to banking anytime and anywhere. While it does have its disadvantages, it can still do more good if used properly and continuous improvements. Therefore, it still has the potential to be better and help more consumers worldwide.
